United States: Second Circuit Vacates Misbranding Conviction For Pharmaceutical Representative On First Amendment Grounds

Last Updated: December 7 2012
Article by John L. Brownlee and William F. Gould

John Brownlee is a Partner in our Northern Virginia office, William Gould a Partner in our Washington, D.C. office and Timothy Taylor an Associate in our Northern Virginia office

The Court's Decision Has Major Implications for the Pharmaceutical Industry

In United States v. Caronia, No. 09-5006-cr, slip op. (2d Cir. Dec. 3, 2012), the U.S. Court of Appeals for the Second Circuit held that "the government cannot prosecute pharmaceutical manufacturers and their representatives under the [Food, Drug and Cosmetic Act (FDCA)] for speech promoting the lawful, off-label use of [a U.S. Food and Drug Administration] FDA-approved drug." Slip op. at 51. Such speech, according to the court, qualifies as protected commercial expression, id. at 31, including the shield of heightened scrutiny against attempted restrictions, id. at 39. Following this conclusion, the court determined that the legal theory undergirding the government's prosecution failed to withstand this heightened scrutiny and that, therefore, the conviction at issue had to be vacated. See id. This decision has fascinating implications for pharmaceutical manufacturers, their employees and the medical industry as a whole, and it will certainly give federal prosecutors pause before bringing similar cases.1

A Long Time Coming

The Caronia case represents the latest chapter in the ongoing battle over the regulation of pharmaceutical company speech. As noted by the trial court in this case, the defendant's First Amendment challenge "rais[ed] constitutional issues 'very much unsettled, not only in this circuit but nationwide.'" Caronia, slip. op. at 19–20 (citing United States v. Caronia, 576 F. Supp. 2d 385, 403 (E.D.N.Y. 2008), vacated and remanded by Caronia, No. 09-5006-cr).

The unsettled nature of these issues was highlighted by the case's procedural history on appeal. The Second Circuit heard oral argument in the case over two years ago, on December 2, 2010. However, the court then requested supplemental briefing in light of Sorrell v. IMS Health Inc., 131 S. Ct. 2653 (2011). Sorrell, decided June 23, 2011, struck down a Vermont statute restricting pharmaceutical manufacturers from using prescriber-identifying information for marketing purposes. The court held this to violate the Constitution's free speech protections. The parties completed their supplemental briefing in Caronia on August 29, 2011, and the Second Circuit's decision was published this week.

The Legal Framework: The "Off-Label" Paradox

At issue in Caronia was the government's prosecution premised on a particular construction of the FDCA and its implementing regulations. That legal framework, in a nutshell, is as follows. Before a drug may be distributed in interstate commerce, it must be approved by FDA for a specific use or uses. 21 U.S.C. § 355(a). Such approved uses are the only uses allowed on the drug's labeling. Id. § 321(m), (p). Despite this restriction, physicians may prescribe so-called "off-label" uses for drugs.

Even so, a drug is misbranded if "its labeling fails to bear 'adequate directions for use,' [id.] § 352(f), which FDA regulations define as 'directions under which the lay[person] can use a drug safely and for the purposes for which it is intended,' 21 C.F.R. § 201.5." Caronia, slip op. at 7 (second alteration in original). A drug's intended use can be manifested by, among other things, "oral or written statements" by a drug's manufacturer or other "circumstances that the article is, with the knowledge of such persons or their representatives, offered and used for a purpose for which it is neither labeled nor advertised." 21 C.F.R. §201.128. Intended use can even be shown, arguably, by a manufacturer's mere knowledge or notice that its drug is to be used off-label. Id. Thus, a manufacturer misbrands a drug anytime it intends a use for the drug — as manifested by its speech, by its conduct, or potentially even by its knowledge — which use does not contain "adequate directions" on its label. Id.

This scheme creates a paradox for drug manufacturers. On the one hand, "if a manufacturer knows, or has knowledge of facts that would give him notice, that a drug introduced into interstate commerce by him is to be used for [an off-label use], he is required to provide adequate labeling for such a drug [for that off-label use]." Id. On the other hand, the manufacturer cannot provide that labeling without FDA approval. See 21 U.S.C. §355(a). Thus, until Caronia, manufacturers were compelled to be silent about off-label uses or risk criminal prosecution.

The Facts of the Case

Turning to the facts of Caronia, the case involved the prosecution of two individuals and a pharmaceutical company for misbranding the drug Xyrem, a drug FDA approved for narcolepsy, but also used off-label in treating fibromyalgia and chronic fatigue. The prosecution was based largely on the defendants' alleged promotion of Xyrem for off-label uses. Alfred Caronia was employed by Orphan Medical, Inc., which is now Jazz Pharmaceutical, as a sales representative. Caronia, slip op. at 11, 13. Caronia managed a "speaker program" for Xyrem, in which a physician, Dr. Peter Gleason, educated other physicians about Xyrem. Caronia and Gleason were secretly recorded recommending off-label uses for Xyrem, and both, along with Orphan Medical, were charged under the misbranding provisions of the FDCA. Gleason and Orphan pled guilty. Id. at 19.

At trial, a jury found Caronia guilty of conspiracy to introduce a misbranded drug into interstate commerce. Id. at 24. The jury acquitted Caronia of the charge of misbranding. Id. His appeal followed.

Speech Is Speech

The Second Circuit vacated Caronia's conviction and remanded the case. Writing for the court, Judge Chin first discussed whether the government prosecuted Caronia for his truthful, non-misleading speech alone or whether the government used Caronia's speech solely as evidence of his intent to misbrand a drug.2 The prior may qualify for constitutional protection, while the latter may not.

The court held that, at least in this case, the government prosecuted Caronia for his speech alone. The court wrote, "[e]ven assuming the government can offer evidence of a defendant's off-label promotion to prove a drug's intended use and, thus, mislabeling for that intended use, that is not what happened in this case." Id. at 27–28 (footnote omitted). "Rather, the government's theory of prosecution identified Caronia's speech alone as the proscribed conduct."3 Id. at 32. The opinion thus leaves open the possibility that a prosecution may survive if it is premised on the idea that the promotion of an off-label use is evidence of an underlying intent to misbrand a drug. The Caronia court, however, seemed at least skeptical of that idea, see id. at 32, as well as the whole of the off-label regulatory scheme, see id. at 45–51; see also Caronia, dissenting slip op. at 8.

Sorrell: A New Framework

Having held that the prosecution was directed at speech itself, rather than an intent to misbrand as evidenced by speech, the Second Circuit then turned to whether the prosecution could withstand scrutiny under the First Amendment. In doing so, the court applied the framework established by Sorrell. In Sorrell, the U.S. Supreme Court first considered whether a government regulation of pharmaceutical manufacturer speech was content- and speaker-based. See slip op. at 36 (citing Sorrell, 131 S. Ct. at 2662–64). The regulation was, thus triggering a high level of scrutiny. Id. (citing Sorrell, 131 S. Ct. at 2662–64). The Supreme Court then concluded that under any heightened level of scrutiny, including the "intermediate standard" for commercial speech first established in Central Hudson,<4 the regulation failed. Id. at 36–37 (citing Sorrell, 131 S. Ct. at 2667).

The Second Circuit's application of Sorrell left little doubt as to the unconstitutionality of Caronia's prosecution. First, the court held that the government's construction of the misbranding provisions were content- and speaker-based. In doing so, the court pointed out the incongruity of the provisions. The government's construction was content-based because "speech about the government-approved use of drugs is permitted, while certain speech about the off-label use of drugs ... is prohibited, even though the off-label use itself is not." Id. at 40 (citing 21 U.S.C. §§331(a), 333(a)(2)). Likewise, the government's construction was speaker-based because "it targets one kind of speaker — pharmaceutical manufacturers — while allowing others to speak without restriction." Id. (citing Sorrell, 131 S. Ct. at 2663). "This construction 'thus has the effect of preventing [pharmaceutical manufacturers] — and only [pharmaceutical manufacturers] — from communication with physicians in an effective and informative manner." Id. at 41 (alterations in original) (quoting Sorrell, 131 S. Ct. at 2663).

Second, the court then held that the government's construction of its regulations failed the commercial speech test of Central Hudson.5 The court determined that the speech in question was neither misleading nor unlawful and that the government's interests in drug safety and public health, as implemented by encouraging manufacturers to apply for on-label drug uses, were substantial. Id. at 42–43. The court found, however, that the government's prosecution failed to materially advance that government interest and that the regulation was not narrowly drawn. Here, too, the court criticized extensively the incongruity of the off-label regulatory scheme. In examining whether the government's position furthered its public health interests, the court reasoned that, "[a]s off-label drug use itself is not prohibited, it does not follow that prohibiting the truthful promotion of off-label drug usage by a particular class of speakers would directly further government's goals ... ." Id. at 44 (citing Sorrell, 131 S. Ct. at 2668–69). Or, to put it more bluntly, "[t]he government's construction of the FDCA essentially legalizes the outcome — off-label use — but prohibits the free flow of information that would inform that outcome." Id. at 47. Similarly, when determining that the regulation was not narrowly drawn, the court reasoned that "[t]he government has not established a 'reasonable fit' among its interests in drug safety and public health, the lawfulness of off-label use, and its construction of the FDCA to prohibit off-label promotion." Id. at 50 (citing Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 480 (1989)).

The Second Circuit then summarized its holding, emphasizing again that it had only held unconstitutional the government's construction of the off-label regulatory scheme, and not any statutes or regulations themselves. See id. at 51.

The Dissent

Judge Livingston dissented and accused the majority of "call[ing] into question the very foundations of our century-old system of drug regulation." Caronia, dissenting slip op. at 1. In a forceful opinion, she laid out a history of the FDCA's concern with the "intended uses" of health products, arguing that speech like Caronia's serves only as evidence of "an objective intent that the drug be used for [a particular] purpose." Id. at 12. According to Judge Livingston, if that purpose is not approved by the FDA, then the drug is mislabeled and a violation has occurred. "[T]hat Caronia was otherwise free to introduce Xyrem into interstate commerce does not give him a First Amendment right to introduce it into interstate commerce for any intended purpose he wished." Id. at 14. Judge Livingston then applied Sorrell and Central Hudson according to this understanding of the case and found that the government's construction of its regulatory scheme should withstand constitutional scrutiny. See id. at 19–30.

Looking Forward

Caronia is indeed a victory for pharmaceutical manufacturers and their representatives and for free speech. The opinion clearly holds that a misbranding prosecution cannot be premised solely on a manufacturer's truthful, non-misleading speech promoting a drug's off-label use. However, the opinion carefully avoided the bigger question: whether a prosecution may still use truthful, non-misleading promotional speech for an off-label use as evidence of an intent to misbrand. Thus, pharmaceutical manufacturers should still proceed carefully — but now, at least, so should federal prosecutors. 

Notes

1 Footnote 10 of the court's opinion warrants special attention from any prosecutor who practices regularly in this area because it addresses a major controversy in off-label regulation. Specifically, the court expresses skepticism that a manufacturer could commit a misbranding violation simply by supplying a drug with knowledge that it would be used for an off-label purpose.

2 He was joined by Judge Raggi. Judge Livingston dissented.

3 This was demonstrated by the government's actions at trial, which repeatedly attacked the promoting speech itself as the statutory violation while failing to distinguish between speech as speech and speech as evidence of intent. See id. at 27–31.

4 Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of N.Y., 447 U.S. 557 (1980).

5 The four prongs of that test are as follows:

First, as a threshold matter, to warrant First Amendment protection, the speech in question must not be misleading and must concern lawful activity. Second, to justify regulations restricting speech, the asserted government interest must be substantial. Third, the regulation must directly advance the governmental interest asserted to a material degree. A commercial speech regulation may not be sustained if it provides only ineffective or remote support for the government's purpose. Fourth, the regulation must be narrowly drawn, and may not be more extensive than necessary to serve the interest.

Caronia, slip op. at 37–38 (citations and internal quotation marks omitted).

www.hklaw.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions